Canadian companies have a natural advantage when it comes to doing business globally, said Dani Reiss, president and chief executive of Canada Goose Inc., which in a little more than 10 years has successfully expanded into more than 40 countries.
“There are differences between cultures and how business is conducted in different countries, but because Canada is so multicultural, I don’t think Canadians experience much culture shock when they go into a foreign market,” Mr. Reiss said.
That said, many companies trying to expand into emerging markets might not be effectively capitalizing on this advantage. An Ernst & Young 2012 survey shows only 20% of executives believe their company manages talent effectively across all markets, and less than one-third agree their top management team has an international outlook on decision-making.
“The two main knowledge gaps on management teams in companies that are in emerging markets and wanting to go global is awareness of the local cultures as well as a bigger picture understanding of the global market,” said Jeff Charriere, Ernst & Young’s Canadian managing partner for accounts and markets.
However, he said, the time to start building a management team that includes the diverse skills needed — from people with knowledge of local markets to others with experience and knowledge of the intricacies and challenges of doing business internationally — is several years before any expansion takes place. In other words, the expertise and insights should be part of the strategic process leading to the expansion.
“In practice, in my experience, only when they are really doing global expansion and finding that they need those global skills, do most entrepreneurial companies start to think about it, not before,” said Ana Azevedo, assistant professor in Entrepreneurship at the Faculty of Business, Athabasca University.
“Just as technology has to be part of the strategic process from the start, so does globalization. IT and globalization are the two most powerful forces we can talk about when we talk about changes organizations need to respond to. But people often don’t think about it until they’re facing the circumstances. Then they realize they need to start looking at skills, background and experience. They need people who have had extensive international experience, including travel, the ability to speak different languages, and have worked and studied abroad.”
A management team with a global perspective was important to Canada Goose’s success in the early 2000s when it began conquering foreign markets, Mr. Reiss said. “The team we had at the time was definitely globally minded. We employ people in other countries as well, and certainly when you’re employing Europeans who have to work with a Canadian company, it’s important to hire people who have experience dealing with North American companies because there are different norms. The differences are subtle, but subtleties are important,” he said.
Most experts agree that diversity is key to a management team that can succeed in expanding into foreign markets. Although people with international business experience are high in demand, and smaller entrepreneurial companies might find it challenging to compete for them, there also is a large untapped immigrant population in Canada that might have that background and experience.
“I think it is important to create diversity and yes, we create diversity at Canada Goose because it’s a strength,” Mr. Reiss said. “The more ways you can see single things from different points of views, the greater the chance you’ll be able to make a better decision.”
Study after study supports Mr. Reiss’s view on diversity — but it has its challenges, Ms. Azevedo said. “A diverse team is a more creative team. The cost of that is that the potential for conflict or misunderstanding and miscommunication is greater so you have to have an environment that embraces differences. The benefits are clear, though. Diversity increases the capacity for global expansion and innovation.”
To create such an environment, Mr. Charriere said, companies would be wise to consider offering diverse incentive options to both attract and retain management talent with diverse backgrounds.
“To enhance their engagement, you have to align their goals with those of the company and you need to create an inclusive environment. You can offer a variety of rewards. Some will be what inspires some of the folk, and other rewards will inspire others. Give them options to choose which rewards speak to them.”